What constitutes 'Gross Sales' for the purpose of calculating the Royalty Fee for a Circle K franchise?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
provided for herein.
1 The Royalty Fee is based upon a percentage of Gross Sales. "Gross Sales" means the total dollar income from the sale of all goods, wares, merchandise, and services sold (including car wash services provided using the Marks), whether sold for cash, for payment by check, on credit, on barter or otherwise, without reserve or deduction for the inability or failure to collect from customers, and all other items of value received by you as payment in the course of such operations (including, without limitation, handling and placement fees and fees for the operation of coin-operated and other machines), excluding the following:
- (i) motor fuel sales, car wash revenues (provided the car wash is not using the Marks), money orders, lottery, pay phones, ATMs, postage stamps, pre-paid phone card, gift cards, and gaming machines;
- (ii) sales from other approved royalty-based franchises that require separate point-of-sale equipment as part of their business system (excluding any approved Additional Business (as defined below in Note 5) which is subject to the separate Co-Branded Royalty Fee noted in the table above);
- (iii) authorized cash or credit refunds made upon transactions that were previously included in Gross Sales, not exceeding the selling price of merchandise returned by the purchaser and accepted, which refunds may be deducted from Gross Sales in the month made;
- (iv) the amount of any separated, collected, and stated city, county, state, or federal sales, luxury, or excise tax on such sales, which you pay directly to the taxing authorities rather than to suppliers; provided, however, that no franchise or capital-stock tax or any other similar tax based upon income, profits, or gross sales shall be deducted from Gross Sales; and
(v) other products or services we may from time to time approve in writing for calculation of gross sales on the basis of earnings as opposed to sales proceeds.
From and after opening of your Store, your monthly Royalty Fee will be the greater of (x) $1,000 or (y) the amount calculated based on the applicable percentage of Gross Sales as noted herein.
You are prohibited from operating another business, including another royalty-based franchised business with separate point-of-sale equipment, at your Store or at the Franchised Location, unless you obtain our prior written consent. Our consent may be conditioned on your agreement that sales from any such other business will be included in Gross Sales for the purposes of calculating your Royalty and Promotional Fee payments under your Franchise Agreement. Operation of any such other business at your Store or at the Franchised Location without our prior written consent will be a material breach of you
Source: Item 6 — OTHER FEES (FDD pages 22–35)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, the royalty fee is calculated as a percentage of Gross Sales. Gross Sales are defined as the total dollar income from all goods, wares, merchandise, and services, including car wash services using Circle K's marks. This includes all sales, whether for cash, check, credit, barter, or other forms of payment, without any deductions for inability to collect payments. It also encompasses all items of value received, such as handling and placement fees, and income from coin-operated machines.
However, the definition of Gross Sales excludes certain items. These exclusions include motor fuel sales, car wash revenues if the car wash doesn't use Circle K's marks, money orders, lottery, pay phones, ATM, postage stamps, pre-paid phone cards, gift cards, and gaming machines. Also excluded are sales from other approved royalty-based franchises that require separate point-of-sale equipment, with the exception of any approved Additional Business which is subject to a separate Co-Branded Royalty Fee.
Further exclusions from Gross Sales include authorized cash or credit refunds for transactions previously included in Gross Sales, up to the selling price of returned merchandise. Additionally, any city, county, state, or federal sales, luxury, or excise taxes collected and paid directly to the taxing authorities are excluded, but franchise or capital-stock taxes or any other similar tax based upon income, profits, or gross sales are not deductible from Gross Sales. Circle K may also approve other products or services in writing for gross sales calculation based on earnings rather than sales proceeds.
It is important to note that Circle K requires a minimum monthly royalty fee, which is the greater of $1,000 or the amount calculated based on the applicable percentage of Gross Sales. Franchisees are also prohibited from operating another business at their Circle K store without prior written consent from Circle K, and any sales from such businesses may be included in Gross Sales for royalty calculation purposes if consent is granted.